Okonjo-Iweala warns against rushing W/Africa single currency
Minister of Finance, Dr Ngozi Okonjo Iweala, has warned against rushing the implementation of a single currency in the West Africa Monetary Zone (WAMZ), saying it will hurt many economies of the member states, especially Nigeria.
Speaking yesterday at the 34th Meeting of the Convergence Council of Ministers and Governors of the Central Banks of West African Monetary Zone in Abuja, Okonjo- Iweala drew attention to the Euro zone crisis since the implementation of the single currency.
The WAMZ single currency is scheduled for January 1, 2015, in the event that all the member countries successfully meet all required criteria.
The criteria are categorised into primary and secondary. The three primary criteria are: Budget deficit (including grants and on commitment basis)/GDP ≤ 3%; average annual inflation < 10 % with a long-term goal of ≤ 5% by 2019; and gross reserves ≤3 months of imports.
The three secondary convergence criteria are: Public debt/GDP ≤ 70%; Central bank financing of budget deficit ≤ 10% of previous year’s tax revenue; and Nominal exchange rate variation ± 10%.
As at December 2013, only Nigeria has satisfied all the primary criteria, while Liberia and Sierra Leone satisfied three each. The other three countries, Ghana, Gambia and Guinea, met only two criteria.
Okonjo-Iweala said when the countries commenced the single currency unprepared, the implication will be that countries, at a later date, will begin to withdraw and the damage will be worst.
According to her, Nigeria as the biggest economy in the region will be forced to bear the brunt at the event of the collapse of the system.
Also, the Minister of State for Finance, Ambassador Bashir Yuguda, said the challenge ahead now was for Nigeria to assist other countries in meeting the criteria.
The president of the ECOWAS Commission, Kadré Désiré Ouédraogo, said it was clear that the intended aim was not to rush into creating a currency without a solid economic foundation.
He said: “The aim is not only to draw lessons from successive postponements of missed deadlines in 2003, 2005, 2009 and probably 2015 for the WAMZ, but also take into consideration the actors behind the euro crisis, that is to say, the fiscal and budgetary problems.”
He said ECOWAS as a key stakeholder will ensure that the vision of an ECOWAS people rather than an ECOWAS of states and a single economic space is realised by 2020.
In this regard, the commission will endeavour that all other integration programmes under its watch are effectively implemented, he noted.